AT&T settles FTC data throttling charges for $60M

AT&T Mobility LLC will pay $60 million to settle charges the wireless provider misled millions of its smartphone customers by charging them for "unlimited" data plans while reducing their data speeds, the Federal Trade Commission announced Tuesday. According to the commission, AT&T began reducing the data speeds for customers on its unlimited plan in 2011, slowing speeds to 128 KB per second once their usage reached a certain level during a billing cycle.

The practice, known as "data throttling," would reduce speeds between 60 to 85% on older 3G networks and up to 95% on LTE plans, according to the commission's complaint.

AT&T revised the data throttling policy in 2012 but still reduced speeds to where "many everyday applications, such as web browsing, GPS navigation, and streaming video were significantly slower," according to the complaint. Federal Trade Commission v. AT&T Mobility LLC, 14-CV04785 (N.D. Cal., filed Oct. 28, 2014).

The provider challenged whether the commission had the jurisdiction to bring charges, but the 9th U.S. Circuit Court of Appeals ruled that it did last year.

In addition to the settlement, AT&T cannot make any claim about the speed or amount of its mobile data plans, including its unlimited offerings, without disclosing any restrictions to speed or data, the commission said in a statement. The restrictions must be prominent and cannot be hidden in fine print or behind hyperlinks, the commission said in the statement.

"AT&T promised unlimited data -- without qualification -- and failed to deliver on that promise," Andrew Smith, director of the commission's Bureau of Consumer Protection said in a statement. "While it seems obvious, it bears repeating that internet providers must tell people about any restrictions on the speed or amount of data promised."

-- Glenn Jeffers